Expats in Spain face new tax reporting requirements

by Ray Clancy on January 14, 2013

Expats in Spain face new tax reporting requirements

A new reporting regime in Spain means that expats with assets outside the country worth over €50,000 who are taxpayers will need to declare them in 2013. Failure to do so would have very costly consequences, according to wealth management group Blevin Franks which specialises in tax and estate planning for expats.

Under a recently introduced anti fraud law, Ley 7/2012, the Spanish government has increased the penalties for those who commit tax fraud, increased tax collection and set out new measures to collect tax debts. The firm says that the most important measure for most expats is the new obligation for Spanish taxpayers to report assets located outside Spain. If the tax defrauded exceeds €120,000, it would be considered a criminal offence.

‘This is a new, additional requirement for Spanish taxpayers. You remain obliged, as always, to also fully declare your annual worldwide income for income tax purposes, and your taxable worldwide assets for wealth tax purposes,’ said a spokesman. ‘From now on, anyone who is tax resident in Spain must declare all the assets they own outside Spain. The authorities will be very strict with anyone who incorrectly declares their offshore assets,’ he explained.

There is a new official form and reporting must be done by the end of the first trimester each year, although the deadline has been extended for reporting assets held as at 31st December 2012, so that the first deadline is 30 April 2013. For future years, the deadline will be 31 March for the previous 31 December.

Quote from ExpatForum.com : “I will be buying a property outright in Spain after selling my property in the UK. I’m doing lots of research about living in Spain, and making sure it’s the right decision. I’m sure you’ve had many threads about “taxes in Spain“. It seems difficult to pin point certain tax information.”

Assets that need to be declared include accounts held with financial institutions; all types of immovable property (real estate) and rights over such property; shares and securities; life insurance policies; temporary or lifetime income generated from the lending of money, rights or other assets (including immovables) to foreign entities. ‘You need to declare these assets if you are the owner, the beneficiary, or an authorised signatory. This includes assets held by a trust or fiduciary. If the value of your total assets in each class is less than €50,000, you are not obliged to report,’ explained the spokesman.

‘Once you have reported the assets the first time, you do not need to report them again each year if the value of all your reportable assets increased by less than €20,000. Where their value has risen by €20,000 or more, you will need to report them again by the next annual deadline,’ he added.

He also pointed out that in the case of accounts with financial institutions, tax payers also need to report the average balance over the last three months of the year. This category includes all types of bank accounts and deposits, including credit accounts, in all currencies, regardless of whether you have the right to withdraw the funds or not. For immovable property, the value is the cost of acquisition, they also need to provide information on the type of property, its location, and date of acquisition.

‘If you fail to report any assets as required by the new law, the costs will be very high once discovered. The undeclared income arising from the asset will be deemed to arise in the last tax year which is not statute barred, four years in most cases. This effectively abolishes the statute of limitations,’ said the spokesman.

It would mean paying all of the following: Income tax at the income tax scale rates where the top rate is over 50%, even if the income would normally be taxed under the savings income regime; late payment interest for the last four years; penalties as high as 150% of the total tax due on the asset; a fine of €5,000 per each piece of unreported data, with a minimum of €10,000.

{ 12 comments… read them below or add one }

Anon January 16, 2013 at 12:19 pm

If I have a business outside of Spain say in the USA and am a tax resident in Spain, does this law also apply? Or is it only for assets like property?

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Roger Cooper January 23, 2013 at 6:28 pm

Regarding the new 'outside Spain' assets reporting, have I got this right? If I have under 50.000 Euros in bank accounts (total), and under 50.000 euros in fixed term bonds and under 50.000 euros in a lending to business fund, I don't need to declare anything, just the income for income tax purposes.

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Steve of AES April 9, 2013 at 8:29 am

That would appear to be correct. It is each ASSET class that is the importunate part, however, play it safe and report!

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Paul January 25, 2013 at 9:42 am

Regarding this new law – is it a requirement to declare amounts that are currently held in a final salary pension scheme in the UK where pension date has not yet been reached?

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worried about this March 30, 2013 at 1:02 pm

I've been told from several sources that my final salary pension is not reportable – but I am drawing it. the trustees in the UK said no-one had asked for a valuation if that helps.

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Linda L February 22, 2013 at 8:06 am

Can anyone clarify if the 50,000 limit is per person or per household, even our fiscal representative cannot say

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worried about this March 30, 2013 at 1:05 pm

As ever 'it depends'. It is per person BUT if you have a joint bank account with your spouse 100% of the value is counted to see if you reach the 50k. e.g. You and your spouse have a joint account worth 40k, you each have an account work 35k, you must report because the valuation for EACH of you is 40k plus 35k. Also if your only account is the joint one and it is worth more than 50k you must report.

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ColBo March 5, 2013 at 6:14 am

I work abroad – pay tax abroad but my dependants family live in spain – and i spend my leave breaks in spain (not amounting to more than 85 days per year – does this make me liable ???

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Mary April 4, 2013 at 3:19 pm

As Spain and the UK have a double taxation agreement is it necessary for all residents in Spain to report their assets even if they are paying all their taxes in the UK?
As a retired (early) person without any income in Spain I only transfer funds into Spain and therefore only pay property taxes etc. in Spain

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baldy April 15, 2013 at 10:03 am

could anyomne clarify? i live in a house worth 200,000 euros in spain, have bank accounts in uk and spain under 50k and have a property in uk worth 170k do i have to report in? also my salary in uk dosent exceed 50k

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anita April 28, 2013 at 3:09 pm

does anyone know the uk equivalent of the spanish NIF?
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dominic carroll June 1, 2013 at 11:46 pm

i am resident in spain , and i have a house in ireland, which i have to pay property tax on there, does that mean i still have to pay tax on it again in spain.

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